Working Paper: CEPR ID: DP3179
Authors: Claudio Michelacci
Abstract: This Paper proposes a model of endogenous growth where innovating requires both researchers, who produce inventions, and entrepreneurs who implement them. As research and entrepreneurship compete in the allocation of aggregate resources, the relation between growth and research effort is hump-shaped. When entrepreneurs appropriate too little rents from innovation, too few resources are allocated to entrepreneurship and returns to R&D are low because of this lack of entrepreneurial skills. When so, innovation should be promoted by encouraging entrepreneurship rather than research.
Keywords: R&D; Entrepreneurship; Endogenous Growth
JEL Codes: J24; O32; O40
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Lack of entrepreneurial skills (L26) | Low returns in R&D (O39) |
| Increase in research effort (O32) | Reduced entrepreneurial skills (L26) |
| Research effort (C99) | Growth (O00) |
| Too much research (C90) | Harm to economic growth (F69) |
| Too little research (D29) | Harm to economic growth (F69) |